Quiet Markets Continue

I have been extremely busy and haven’t had too much time to write like I would like to, but I like to have quiet markets–I don’t feel like I am missing out on too much.

The 10 year treasury is drifting–off a basis point or two and the DJIA is off 66 points–both of these are about as quiet as it gets.

In a note Gridbird mentioned the trust preferred shares of Hillman Group (a private company) and I have done a little digging on the shares as they are trading at $28.42 and have been redeemable since 2002 and mature in 2027. Shares carry a coupon of 11.6%




We find this intriguing as shares traded as high as $34 in the last couple months–down over $6/share. Are the shares going to be redeemed finally?

17 thoughts on “Quiet Markets Continue”

  1. I heard that last quarter conf call they did some talk about refinancing debt. Good luck to all owners. I believe that is what caused the selloff. Too many refinances in the last 2 years. Eventually someone has to recognize/question what they are doing with their debt structure.

    1. I don’t know Mr Lucky–sometimes it is unbelievable have much folks snooze in the face of losing money.

  2. A quiet market is a perfect market. Just let the income stream in day after day, week after week.

  3. Tim, you may want to consider looking at CNIGP. I bought 360 more shares today. 300 at 20.70 and 60at 20.85…..Allowing for accrued divi that kicks out at end of month its basically a 5% QDI with a 2026 term date liquidation “put”. The beauty of this issue is it can be converted into 1.2 common shares of CNIG at owners descretion. Considering CNIG closed at $18 today this equals $21.60 on CNIGP. A seller was out below $21 today. Hardly a busted convertible and you get potential for upside with the backside put option in 2026 in place. Par is $20.75.
    CNIG is a small gas distribution and electrical utility in New York. CNIGP was privately placed to existing common shareholders a couple years ago. About 245,000 shares are outstanding. Management and Gabelli own the vast majority. A very rare liquidity even has occured here today and some were left on the table at market close.

    1. Hi Grid–I have this one–and had a gtc buy order in which I see expired–damn—my buy was at 21 so would have filled. I just put in another gtc until 12/3/2018 for a few hundred more.

  4. Tim, I wouldnt touch this trust preferred with a 10ft pole….

    http://www.hillmangroup.com/downloads/sec_2018_3q_10q.PDF

    If you look on page 20 of 10K above link you will see managment says they are “pursuing refinancing of outstanding debt”.
    If you then look at page 12, you will see this 11% trust debt issue sticks out like a sore thumb versus the 3 other options of revolver, 2020 senior term, and 6.375 senior note.
    The stock has been violently bouncing around but way below recent highs. I wouldnt risk possibility ones in the know are dumping and yield grabbers are getting sucker punched. I love past call above par issues, but risk/reward must favor me and that note on page 20 is a warning shot across the bow I respect.

    1. Hi Grid–I did notice how lower cost debt they had—so will look a little closer. Folks really don’t pay attention to what they have. Wouldn’t it be common sense that if you had this issue you would have bailed at $34? You snooze you lose.

      1. What is interesting Tim is there are only a bit over 300 owners of HLM-. And its over a $100 million issue. So simple math shows a few owners or entities are big time owners of this. Which increases chances somebody knows to get out with such an increase flood of liquidity occurring.

        1. I noticed it jumped up 2.39 yesterday with over 20,000 shares traded–maybe the smart money moving to the dumb money.

      2. Tim, CNIGP may serve no interest to you, but I forgot to add, this thing is real illiquid due to fact about a half dozen people own majority of the convertible preferred. In fact it has only traded less than 40 times since issued almost 2 years ago. With 7 of those trades this week. I know you have expressed interest in CNIGP which I have flipped a few times but it has shown no liquidity other than a few hundred shares past few weeks. Im at the point where I find the relative value better with CNIPG than CNIGO, but neither are life changers in terms of yield, lol.

        1. Yes I know the liquidity of the issue since my holdings jump up and down–but I don’t care about too much liquidity with this issue–a modest amount of issues that are illiquid are just fine with me.

          1. Well that was quick…Those 1511 CNIGP shares left dangling from yesterday were gobbled up at $21 today. One share at 175 available. I guess there wont be any trades for awhile now, lol.

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